The satellite sellers

ByRob Steiner, Rob Steiner is a television producer and a contributing editor to Channels magazine.March 22, 1982

With the explosion of cable television and the proliferation of services it promises to offer, satellite transmission facilities are more crucial than ever before. Indeed, if the telecommunications revolution can be said to have a heart , it is probably the relay point on a satellite, the transponder. Capable of receiving, altering, and retransmitting signals from earth a hundred times faster than the best lines over land, a transponder is a de facto cable television channel.

Transponders have traditionally been leased at monthly tariffs set by communications satellite operators and approved by the Federal Communications Commission as just and reasonable, according to the 1934 Communications Act. All operators have functioned as common carriers, meaning that they must offer their service for hire indiscriminately to the public at large. The principle has always been first come, first served.

But these leases are now so valuable that Landmark Communications, a Virginia concern planning a 24-hour weather channel, recently paid $10.5 million for one. This enormous sum went to Premiere, a leaseholder, who according to current law, was free to sell its transponder to the highest bidder. The major common carriers - currently RCA and Western Union - cry foul, contending that they are more entitled to such profits than ''speculators'' who have taken none of the risks involved in operating communications satellites.

Within the next few months, the FCC must make two critical, and related, decisions on the allocation of transponders. They must decide first, whether a ''demand-based'' price - a rate based roughly on what the market will bear - is just and reasonable. Second, they must decide whether transponders can be sold outright; or, in other words, whether the companies that build and operate satellites can be freed of their common carrier status and obligations. The implications could be enormous.

On Nov. 9, 1981, the common carrier RCA Americom held an auction at Sotheby, Parke-Bernet Galleries for seven transponders on its Satcom IV satellite. As a method for determining a demand-based price, an auction seemed logical, had even been suggested in a recent FCC economics division report.

Representatives of over 50 cable interests participated and the winning bids ranged from $10.7 to $14.4 million. This price range proved the auction's undoing, as the FCC nullified the results on the grounds that discriminatory rates violated common carrier laws. But in a sense, RCA's point had been made. The auction demonstrated that tremendous sums of money would be paid up front for transponder service, a premise the industry had been operating under for some time.

Clearly, satellite operators are tired of taking a back seat to speculators free to reap what the market will bear while they are bound to tariffs that guarantee a generous but unspectacular profit. To their minds, they have taken the risks and deserve the rewards.

But their desire to get even poses a grave threat to small programmers. They saw RCA's auction, in the words of one petition to the FCC, as ''an arrogant plan to wield market power: by extracting the maximum payment for a scarce resource.'' Worse, they fear that if transponders simply go to the highest bidder, the financial giants of the cable industry - Warner Amex, Time Inc., and Westinghouse - will further indulge their prodigious appetites for transponders. Under present projections, by mid-1983 Time Inc. will have title to 12 transponders, and Westinghouse 16. And control of transponders means control of programming.

Given the Reagan administration's strong bias toward deregulation, it seems very unlikely that the FCC will forbid demand-based pricing and noncommon carriers. As former FCC commissioner Nicholas Johnson has observed, ''Congruence between commission action and White House recommendation is striking.''

But as the commission has solicited public comment on the transponder sales concept, it seems pertinent to recall a 1973 FCC decision that actually allowed National Satellites Services (the forerunner of Hughes Communications) to operate as a noncommon carrier. An involved co-venture with General Telephone and Electronics, the deal ultimately dissolved. But the commission's ruling is worth remembering. It reveals a concern for the public good that today seems almost touching.

The FCC was impressed by National Satellites Services' argument that studies showed a demand for cultural, children's, educational, vocational training, public affairs, and minority programming. NSS was to have provided two free transponders to the Public Broadcasting Service, and to have insured that its customers could eventually receive several distributors' programming. And most important, NSS agreed to make available a transponder ''on an equitable and non-discriminatory basis'' - if you will, a public access transponder.

If the FCC is bent on deregulation and the creation of noncommon carriers, the least we must demand are such guarantees of reasonable public access to satellite communications. The very premise - and promise - of cable television is diversity. Fifty or 60 channels to inform, entertain and increasingly, serve, in new and different ways. Such a potentially broad range of offerings must not fall into a few wealthy hands.

No one should forget that communications satellites were developed by the space program, at taxpayer expense. The public deserves some recompense.